Investing.com - New York-traded crude oil futures fell to a
three-month low on Friday, as disappointing manufacturing data out
of China and the euro zone underlined concerns over the global
Oil prices came under additional selling pressure as a broadly
stronger U.S. dollar and worries over U.S. spending cuts, known as
the sequester, weighed on the appeal of growth-linked assets.
On the New York Mercantile Exchange, light sweet crude futures for
delivery in April fell 1.2% Friday to settle the week at USD90.92 a
barrel by close of trade.
Nymex prices fell to as low as USD90.06 earlier in the day, the
weakest level since December 31. On the week, New York-traded oil
futures lost 2.6%, the second consecutive weekly decline.
Oil prices came under pressure after government data showed that
manufacturing activity in China fell to a five-month low of 50.1 in
February from a reading of 50.4 in January.
China is the world's second largest oil consumer after the U.S. and
has been the engine of strengthening demand.
Oil prices were further weighed after weak manufacturing data out
of the U.K. and the euro zone fuelled concerns over the outlook for
Revised data showed that manufacturing activity in the euro zone
contracted in February at the same pace as in January, while the
U.K. manufacturing sector suffered a shock contraction last month.
Oil traders often use manufacturing numbers as indicators for
future fuel demand growth.
The downbeat global economic data prompted investors to shun
riskier assets, such as industrial commodities and flock to
traditional safe-haven assets, like the U.S. dollar.
The dollar index, which tracks the performance of the greenback
against a basket of six other major currencies, ended the week at
82.33, the strongest level since August 20.
Oil prices typically weaken when the U.S. currency strengthens as
the dollar-priced commodity becomes more expensive for holders of
The dollar also found support amid worries over U.S. spending cuts,
known as the sequester, after lawmakers failed to reach an
agreement on a deficit reduction plan.
President Barack Obama warned Friday that federal spending cuts
will cause "ripple effects" through the U.S. economy. Obama called
on Congress to pass an alternative budget plan that closes tax
loopholes and cuts spending, including entitlements.
Oil futures managed to come off the lows of the session after data
showed that the U.S. manufacturing sector expanded at its fastest
pace since June 2011 last month, while a separate report showed
that U.S. consumer confidence rose in February.
The Institute for Supply Management said its manufacturing
purchasing managers' index rose to 54.2 from 53.1 in January, while
the final reading of the University of Michigan's consumer
sentiment index came in at 77.6, from a preliminary reading of
The U.S. is the world's biggest oil-consuming country, responsible
for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange in London, Brent oil futures
for April delivery fell 0.7% Friday to settle the week at USD110.62
a barrel, the lowest level since January 17.
The London-traded Brent contract lost 3.2% over the week, while the
spread between the Brent and the crude contracts stood at USD19.70
In the week ahead, oil traders will be focusing on Friday's data on
U.S. nonfarm payrolls, as investors attempt to gauge the strength
of the economic recovery.
Interest rate decisions by the European Central Bank, the Bank of
England and the Bank of Japan will also be in focus.
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